Blog:Bombay dreams or reality

With the seemingly fast-approaching merger between Allied Domecq and Pernod Ricard snapping up the headlines, the small matter of the formation of the world's second largest spirits group has slipped by almost un-noticed by the Western press.

However, McDowell & Co. yesterday completed its acquisition of its rival Shaw Wallace & Co. The transaction, for INR15.45bn (US$354m), has propelled McDowell’s parent company, the UB Group, from the fourth largest spirits company globally to number two behind Diageo.

Apart from SWC, the UB group’s spirits business comprises McDowell, Herbertsons and Triumph Distillers and Vintners. These divisions are being merged into a single umbrella, United Spirits. The newly-combined business will have 140 brands produced at 75 locations across India, boasting total sales in excess of 60m cases annually.

Anyone who dismisses this giant as a local player of little international consequence, however, should take heed of an interview with UB Group chairman Dr Vijay Mallya on Indian television today, where he told journalists he was looking to knock Diageo of its global top spot.

He will need to find around an extra 25m cases in sales to do that. However, he confidently stated: "There is strong organic growth. If we are able to make certain strategic acquisitions, then the leadership position is well within reach in five years."

With the Indian market growing at the rate that it is in comparison to Western markets, there is plenty of ground to be gained there. But Mallaya's ambitions apparently lie on an international stage as well. In fact, not only did he mention potential acquisitions in China, he also said that UB could be the beneficiary of the Allied takeover by purchasing brands that are spun off from the deal.